There has been a rising trend in private equity hiring over the past five years. That trend is the recruitment of interim and on-demand executives for leadership roles in a wide range of functions. Many firms are choosing to supplement their leadership teams during busy deal periods, to navigate rapid portfolio shifts or implement turnaround strategies. Others are using interim hires to access specialist skills particularly for digital transformations or mergers and acquisitions (M&A) integrations. Hiring interim leadership can be a great way to address these complex challenges and to seize new opportunities.
The Growing Need for Interim Leadership in Private Equity
The biggest question is why interim hiring is so attractive for private equity firms right now. The answer lies in the uncertainty of the past few years. The private equity market is only just emerging from a period of stagnation defined by high inflation and geopolitical crises. Firms have been forced to look for new ways to navigate challenges during this period.
Relying solely on permanent leadership teams is often insufficient to meet the immediate and specialised needs that arise in the investment lifecycle in such a volatile market. Interim leadership offers a flexible and effective solution, providing access to seasoned professionals who can deliver immediate impact.
And, while the market outlook is now more promising – deal, exit and distribution activity are all on the rise – that in itself means that firms are looking for executives who can offer management support as things heat up. In fact, demand for interim leadership in private equity has increased significantly across finance, tech and other functions.
Finally, how businesses view interim leadership itself is changing. In that past interim leaders were often brought in to fill sudden and unexpected gaps in leadership. However, interim executives are now considered a more strategic asset, that can be brought in to drive change and offer a fresh, new perspective on old challenges.
Advantages of Engaging Interim Leadership in Private Equity
- It’s Cost-Effective – Interim leaders are engaged for specific durations and objectives, reducing the financial commitments associated with permanent hires. This approach allows private equity firms to allocate resources efficiently, investing in expertise precisely when and where it is needed.
- Rapid Deployment – Interim executives can be deployed quickly, addressing critical needs without the delays associated with traditional recruitment processes. This agility ensures that portfolio companies do not lose momentum during pivotal periods.
- An Objective Perspective – Interim leaders bring an external viewpoint, without internal biases or historical constraints. This objectivity enables them to make impartial decisions, implement best practices from diverse industries, and challenge the status quo to drive innovation and improvement.
- Flexible and Scalable – As portfolio companies grow, their leadership requirements may change. Interim leadership offers the flexibility to scale management resources up or down based on current needs, ensuring that an appropriate leadership structure is maintained throughout different growth phases.
That’s not to say that bringing in interim leadership is without its challenges. Integrating an interim executive into the company culture can be difficult, and their short-term tenure may create concerns about continuity and long-term vision. However, when the right talent is selected, these challenges can be mitigated. A well-matched interim leader will quickly adapt and drive immediate impact, without disrupting long-term objectives. In the right circumstances, interim leadership can be a highly effective solution.
When to Consider Interim Leadership in Private Equity
Transformation and Turnaround Initiatives
Portfolio companies can face periods of underperformance or require strategic redirection. Interim leaders bring a wealth of experience in executing turnaround strategies. Their objective perspective allows them to assess existing operations, identify inefficiencies and make decisions unencumbered by internal politics or legacy issues, allowing them to diagnose issues and implement corrective strategies to restore profitability.
M&A Integrations
Mergers and acquisitions are integral to private equity growth strategies. However, their success hinges on seamless integration processes. Interim leaders specialising in M&A have expertise in bringing together disparate corporate cultures, harmonising operational processes, and achieving synergies. Their focused approach provides valuable insights and leadership continuity and ensures that integration plans and timelines are met, and value realisation is accelerated.
Specialised Skills for Specific Projects
Certain scenarios demand niche expertise that existing leadership teams may lack. For instance, implementing a new technology platform, entering a foreign market, or navigating regulatory changes benefit from specialised knowledge. A key example is driving integrated Enterprise Resource Planning (ERP) and Enterprise Performance Management (EPM) solutions, which are critical for streamlining operations and enhancing financial oversight. Interim executives with the requisite skill sets can be engaged on a project basis, ensuring that these initiatives are executed proficiently without the long-term commitment of a permanent hire.
Bridging Leadership Gaps
Unexpected departures or prolonged searches for permanent executives can leave critical leadership gaps. Engaging an interim leader ensures business continuity, maintaining stakeholder confidence and operational stability while the search for permanent replacements is underway. These professionals can also mentor internal candidates, preparing them for eventual leadership roles.
You may also be required to consider on-demand or interim leadership hires for specific roles and functions including:
Finance
With immediate financial oversight, interim CFOs can implement robust financial controls, optimise capital structures, and enhance reporting mechanisms. Their expertise is crucial during due diligence, fundraising, and exit planning stages.
Operations
Interim COOs streamline processes, drive efficiency initiatives, and oversee supply chain optimisation. Their efforts directly impact the bottom line, making portfolio companies more competitive and profitable.
Human Resources
Interim CHROs lead organisational restructuring, talent acquisition, and cultural integration. They improve employee engagement with the company’s strategic objectives. Notably, companies that appoint CHROs during private equity investment periods outperformed peers, with 30% of top-performing firms making interim HR hires compared to only 5% of lower performers.
Technology
Interim CTOs are brought in to drive digital transformation, oversee cybersecurity, and integrate emerging technologies like AI that can improve operational efficiencies. Their role is vital in ensuring portfolio companies access the benefits of new technologies and avoid mistakes in their integration.
Partnering with Cedar for Executive Search
At Cedar, we specialise in identifying and securing the right interim leadership talent to help you meet the demands of the private equity market. Our industry expertise allows us to quickly connect firms with highly skilled interim executives who can deliver immediate impact.
How?
We maintain an extensive network of experienced interim executives across finance, transformation and technology, tax and procurement. Whether you need an interim CFO to stabilise financial performance or an interim CTO to lead post-merger integration, we have the right talent.
Our streamlined search process ensures you secure interim leadership talent quickly, minimising disruptions and maximising value creation.
We take the time to understand your firm’s specific needs and objectives, ensuring that each interim placement is tailored to your business and your goals.
Each of our pre-vetted interim executives have a track record of delivering results in private equity environments. We ensure you get leaders who can execute high-stakes initiatives with confidence and precision.
Contact our experts today to discuss how interim leadership can help your private equity firm achieve its strategic goals.